AB 1513 Due Diligence and Payment Procedures - Time to Comply is Running Out

By: Kyle D. Kring

Posted on November 8, 2016

As many of you know, the deadline to make the AB 1513 payments is currently December 15, 2016, unless the Fresno Superior Court issues a stay on payments made per AB 1513 within the next week or two, which appears unlikely at this time. What you may not know is that the December 15th deadline applies to both payments to employees you are able to identify and payments to the DIR/DLSE (two separate checks) for employees who you are not able to locate.

In order to accomplish your "due diligence" in locating ex-employees, you need to start the investigative process now to ensure compliance by December 15, 2016. We have recommended a two-step process of sending an initial letter to your ex-employees requesting they confirm their last known address. If the employee does not respond to this letter, we recommend that you conduct a public records search in a further attempt to locate the ex-employee and satisfy the "due diligence" requirement in AB 1513.

Lastly, in addition to the "due diligence" requirement in locating ex-employees, each employer is required to prepare a payment statement to each employee or ex-employee they are able to locate and provide a check, along with a different payment statement to the DIR/DLSE for those ex-employees they are not able to locate after following the "due diligence" process. These statements must have certain required information which will take some time to prepare and process. For instance, the payment statement to each employee or ex-employee the employer is able to locate must contain the following information:

(1) Payment is made per Labor Code 226.2;

(2) Which formula was used to calculate the payment, i.e. actual sums due or 4%;

(3) Pay periods which employee had piece rate earnings during period from 7/1/12 - 12/31/15;

(4) Gross wages and any amounts already paid to the employees separate from piece rate compensation; and

(5) The calculations that were made to determine the total payment made (payroll deductions).

As you can see, this will take some time. In addition, a different statement must be submitted to the state for employees you are not able to locate, including for each employee, their name, net amount payable after payroll taxes, employees last known address and social security number.

If you need any assistance in ensuring compliance, please feel free to give Kyle Kring of Kring & Chung, LLP a call at (949) 261-7700 or via email at kkring@kringandchung.com

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